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EnERGy

Oil & Gas

Growing West African gas distribution Pétro Ivoire director-general Sebastien Kadio-Morokro discusses the various challenges to petrol and gas distribution in Côte d’Ivoire

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ebastien Kadio-Morokro, the directorgeneral of Pétro Ivoire, describes his company’s operations as having two major components; offering a gas bottle distribution for domestic and industrial consumers and petrol for the retail petrol stations that they operate across the country. Sebastien Kadio-Moroko is the son of the founder Mathieu Kadio-Moroko, who established the company in 1994. KadioMoroko senior is now the chairman of the company, leaving the day-to-day management to his son. “Our objective is growth,” Sebastien KadioMorokro said. “To increase our network in terms of filling stations and to stay at the top of the distributor networks here. So we are working on improving our gas and petrol distribution.” Doubling distribution In fact, Kadio-Morokro aims to double the size of the company with five years. Speaking specifically of LPG gas, the managing director says that there are one million branded Pétro Ivoire gas bottles in circulation, and the company refills, on average, about 15,000 of the 6kg and 12kg bottles a day. Various logistics companies, on behalf of Pétro Ivoire, handle the physical distribution, but although margins are higher, and the gas trade is hugely important, it is petrol that is the biggest contributor to the company’s bottom line in terms of revenues. Asked what have been the company’s main challenges since his father established operations, Kadio-Morokro says that firstly the hurdle was to establish their network, and then to organise efficient distribution. That was no easy proposition as the multinationals had a stranglehold on the sector. And like many of the indigenous companies that African Review spoke to, the issue of finding investment was a serious constraint. Raising capital seems to be a common problem for all Ivorian companies.

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Sebastien Kadio-Morokro, director-general, Pétro Ivoire

As one businessman explained recently, “There are no investment banks, nor private equity funds in Côte d’Ivoire – all the financial institutions are ultra-risk averse. Yes, I can borrow CFA10mn from a bank, but they will ask for a collateral of CFA40mn-CFA50mn! Raising capital is a big problem for Ivorian enterprises.” But Kadio-Morokro seemed reasonably bullish on this matter because, by leveraging his company’s excellent track record over the years. He confirmed, “We have got all kinds of financing firms and funds to develop our activities”. Distribution is Pétro Ivoire’s core activity, but they are already eyeing other revenue streams to expand the business into other areas. “We need to establish our core distribution activities and finalise investments in the next two or three years, but our vision is to build regional networks in both Francophone and Anglophone West African countries,” he explained.

African Review of Business and Technology - April 2016

Revenue streams In many parts of the world, the retailing of fuel is becoming secondary to the other offerings found at filling stations. For example, following a deal that the giant French energy company Total made with Wari in Senegal, making any Total filling station effectively a Wari agent for the purpose of offering remittances, Total found that it was earning more revenues from Wari than from its petrol sales. When asked about the situation in Côte d’Ivoire, Kadio-Morokro said it was a similar case and Pétro Ivoire has identified providing boutique shops and other services, such as car wash facilities as potentially “interesting revenue streams”. Since Pétro Ivoire began fuel distribution activities in Côte d’Ivoire, others have seen the company’s success and attempted to replicate their business model. But Pétro Ivoire was the first private Ivorian company to distribute gas and petrol. Was there an advantage to being seen as a pioneering, indigenous company? KadioMorokro was dubious that his company could really take advantage of this fact, and instead insisted on the importance of being a company that offers the same level of services and products that its main rivals, the major multinationals, provide to their customers. He reassured this writer that these multinationals play fair in the ultracompetitive downstream oil and gas sector thanks to the government’s stringent regulatory environment. But Kadio-Morokro did add the rider that smaller companies are not always so diligent in always respecting the local rules. Kadio-Morokro also says that Pétro Ivoire is scrupulous in ensuring all the companies that it works with, for example the road transport operators that are contracted to move the petrol and gas bottles around the network, strictly adhere to the rules and regulations. ■ Stephen Williams www.africanreview.com

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African Review April 2016  

African Review April 2016